Breach of Confidence - Clements v Frisby
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Business and Property Courts in Manchester (HH Judge Cawson) Clements v Frisby [2023] EWHC 320 (Ch) (16 Feb 2023)
This was an action for breach of confidence. The claimant. Paul Clements ("Mr Clements"), alleged that he had disclosed in confidence to the defendant, Adam Frisby ("Mr Frisby"), and Jessica Devine ("Mrs Devine") a business plan for a women's clothing e-commerce retailer. He complained that Mr Frisby had used the plan to set up his own e-commerce business known as "In the Style" which he subsequently floated on the Alternative Investment Market to raise £125 million. Mr Frisby denied Mr Clements's allegations after which Mr Clements launched proceedings. The action came on for trial before His Honour Judge Cawson KC from 16 to 20 Jan 2023. The learned judge delivered judgment on 16 Feb 2023 (see Clements v Frisby [2023] EWHC 320 (Ch) (16 Feb 2023). By para [229] of his judgment, Judge Cawson dismissed the action.
The Claim
Mr Clements put his case in two ways which the judge summarized as follows at para [110] of his judgment:
"i) Firstly, a claim in equity founded upon the imparting of confidential information in relation to the Alleged Business Plan to Mr Frisby in confidence, which Mr Frisby wrongfully has misused and applied for his own purposes in establishing and carrying on the business of In The Style through the Company; andii) Secondly, a claim based upon an agreement that Mr Clements alleges was concluded with Mr Frisby whereby he was employed or engaged for £200 per week to set up the In The Style business, and for the purposes of which confidential information in the form of the Alleged Business Plan was imparted to Mr Frisby, which such agreement is alleged to have given rise to fiduciary duties on the part of Mr Frisby, and a contractual obligation not to misuse the confidential information imparted to him, which such duties and obligation Mr Frisby has breached by exploiting the opportunity and confidential information provided to him for his own purposes."
The Law
Judge Cawson referred to paras [22] to [24] of the judgment of Lord Neuberger in Vestergaard Frandsen A/S v Bestnet Europe [2013] ICR 981, [2013] 4 All ER 781, [2013] IRLR 654, [2013] UKSC 31, [2013] RPC 33, [2013] WLR(D) 200, [2013] EMLR 24, [2013] 1 WLR 1556:
"[22]….After all, an action in breach of confidence is based ultimately on conscience. As Megarry J said in Coco v A N Clark (Engineers) Ltd [1969] RPC 41, 46: "the equitable jurisdiction in cases of breach of confidence is ancient; confidence is the cousin of trust."
[23] The classic case of breach of confidence involves the claimant's confidential information, such as a trade secret, being used inconsistently with its confidential nature by a defendant, who received it in circumstances where she had agreed, or ought to have appreciated, that it was confidential: see eg per Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 281. Thus, in order for the conscience of the recipient to be affected, she must have agreed, or must know, that the information is confidential.
[24] The decision in Seager v Copydex Ltd [1967] 1 WLR 923, on which Arnold J relied, was an entirely orthodox application of this approach. The plaintiff passed on to the defendants a trade secret about his new design of carpet grip, and, although the defendants realised that the secret was imparted in confidence, they went on to use that information to design a new form of carpet grip, which they marketed. What rendered the case unusual was that the defendants (i) did not realise that they had used the information, as they had done so unconsciously, and (ii) believed that the law solely precluded them from infringing the plaintiff's patent. However, neither of those facts enabled them to avoid liability, as, once it was found that they had received the information in confidence, their state of mind when using the information was irrelevant to the question of whether they had abused the confidence."
He mentioned Mr Justice Megarry's identification of the three elements necessary for a cause of action for breach of confidence in Coco v A N Clark (Engineers) Ltd [1969] RPC 41, namely:
"i) The information was of a confidential nature;
ii) It was communicated in circumstances importing an obligation of confidence; and
iii) There was an unauthorised use of the information."
"[22]….After all, an action in breach of confidence is based ultimately on conscience. As Megarry J said in Coco v A N Clark (Engineers) Ltd [1969] RPC 41, 46: "the equitable jurisdiction in cases of breach of confidence is ancient; confidence is the cousin of trust."
[23] The classic case of breach of confidence involves the claimant's confidential information, such as a trade secret, being used inconsistently with its confidential nature by a defendant, who received it in circumstances where she had agreed, or ought to have appreciated, that it was confidential: see eg per Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 281. Thus, in order for the conscience of the recipient to be affected, she must have agreed, or must know, that the information is confidential.
[24] The decision in Seager v Copydex Ltd [1967] 1 WLR 923, on which Arnold J relied, was an entirely orthodox application of this approach. The plaintiff passed on to the defendants a trade secret about his new design of carpet grip, and, although the defendants realised that the secret was imparted in confidence, they went on to use that information to design a new form of carpet grip, which they marketed. What rendered the case unusual was that the defendants (i) did not realise that they had used the information, as they had done so unconsciously, and (ii) believed that the law solely precluded them from infringing the plaintiff's patent. However, neither of those facts enabled them to avoid liability, as, once it was found that they had received the information in confidence, their state of mind when using the information was irrelevant to the question of whether they had abused the confidence."
He mentioned Mr Justice Megarry's identification of the three elements necessary for a cause of action for breach of confidence in Coco v A N Clark (Engineers) Ltd [1969] RPC 41, namely:
"i) The information was of a confidential nature;
ii) It was communicated in circumstances importing an obligation of confidence; and
iii) There was an unauthorised use of the information."
Finally, he quoted the following passage at page 215 of Lord Greene MR's judgment in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203:
"[S]omething which is public property and public knowledge cannot per se provide any foundation for proceedings for breach of confidence. However confidential the circumstances of communication, there can be no breach of confidence in revealing to others something which is already common knowledge. But this must not be taken too far. Something which has been constructed solely from materials in the public domain may possess the necessary quality of confidentiality: for something new and confidential may have been brought into being by the application of the skill and ingenuity of the human brain. Novelty depends on the thing itself and not upon the quality of its constituent parts. Indeed, often the more
striking the novelty, the more commonplace its components"
The Defence
Mr Frisby rejected Mr Clements's claim as dishonest and untrue, In the alternative, he argued that it was bound to fail even if Mr Clements's evidence was accepted because the business plan lacked originality and was not communicated in circumstances giving rise to an obligation of confidence.
Conclusion
The learned judge preferred Mr Frisby's evidence to Mr Clements's. It was not supported by the documents or otherwise corroborated. He found at para [224] that the idea behind "In The Style" and its' business concerning collaboration with celebrities involved in reality TV in the marketing, through a website and social media, of fast fashion to younger end women, was that of Mr Frisby and Mrs Devine, and that Mr Clements played no part therein. He did not consider it appropriate to make any finding on the alternative defence,
Further Information
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